Rupee steady; downward pressure remains despite CB moves

Wednesday, 11 February 2015 00:00 -     - {{hitsCtrl.values.hits}}

Reuters: The rupee ended steady on Tuesday despite importer dollar demand, a day after Finance Minister Ravi Karunanayake said the currency would be held at the current level as the central bank prevented its fall through moral suasion. The spot currency ended steady at 132.80/133.00 per dollar. On Friday, the Central Bank lowered the spot rate to 132.80 from 132.60 amid depreciation pressure. Actively traded three-month forwards ended at 134.50/65 per dollar, while all other forwards ceased trading for the second straight session after the Central Bank narrowed the per day premium to two cents on Monday from Friday’s five cents, dealers said. Two-month forwards were active early, but the market stopped trading in them after they did not go beyond 134.05, dealers said. The forwards closed on Monday at 134.05/10. “Everything is restricted, nothing is happening,” said a currency dealer asking not to be named. Another dealer said exporters might convert dollars, which might help ease the pressure if the Central Bank held the rupee at these levels for the next few days. Officials from the central bank were not immediately available for comment. The Finance Minister told Reuters in an interview on Monday that the rupee will be held steady at current levels and “there won’t be any devaluation at all.” The rupee is under pressure due to higher imports and rising private sector credit in a lower interest-rate regime. Dealers said policy uncertainty weighed on the currency as the Government has sent mixed signals on investment, discouraging exporter dollar sales amid continued importer demand. They expect the pressure on the rupee to ease with some equity-related inflows.